The Karnataka High Court held that the stamp duty expenses in connection with the issue for public subscription of shares or debentures of a company is allowable expenditure.
The assessee, M/s Onmobile Global Limited is engaged in the business of providing mobile value added services and products. The assessee filed return of income for the Assessment Year 2008-09, in which it declared the income of Rs.58,96,36,736/- and claimed a refund of Rs.9,63,42,390/-.
The aforesaid return was processed by the Assessing Officer under Section 143(1) of the Act and subsequently, regular assessment was taken up. Thereafter, an order of assessment under Section 143(3) of the Act was passed by the Assessing Authority, by which the assessing authority disallowed the deduction claimed in respect of stamp duty charges.
The Assessing Officer has disallowed the aforesaid claim on the ground that the expenditure is capital in nature and not revenue expenditure. Even the Commissioner of Income Tax (Appeals) has accepted the aforesaid finding of the Assessing Officer.
However, the benefit of deduction of stamp duty has been granted in view of Section 35D(3)(c) of the Act, which was affirmed by the Tribunal.
The substantial question of law pertains to the claim of the assessee with regard to stamp duty for an amount of Rs.6,87,770.
The division bench of Justice Alok Aradhe and Justice Natrajan Rangaswamy noted that expenditure on account of stamp duty even after introduction of 35D, is an admissible expenditure in connection with the issue of public subscription.
Therefore, the court held that the expenses incurred by the assessee towards stamp duty in connection with issue for public subscription of shares in or debentures of the company is an allowable expenditure under Section 35D of the Act.
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